Video game maker faces lawsuit over alleged in-game gambling
VANCOUVER -- The controversy over loot boxes in video games is heating up again. A class action civil lawsuit filed by a Vancouver law firm on behalf of two Canadian consumers is accusing one of the gaming industry giants, Electronic Arts, of operating an unlicensed gaming business through “loot boxes.”
For those of you who aren’t gamers, a loot box is something you can buy within a game to enhance or improve the gaming experience. Many loot boxes contains randomized virtual items, like skins to change the appearance of characters, or weapons upgrades.
The in-game transactions can be an extremely lucrative revenue source for the gaming industry.
“I have friends that are completely free to play. I have friends that casually dump $8,000 a month because they can afford it,” said Mikhail, a video gamer who did not want his last name used.
The lawsuit lists 60 of EA’s titles, including: EA Sports games, shoot-em-up and role-playing fantasy games and “such other games developed and published by Defendants that may become know to the Plaintiff.”
It’s estimated in-game transactions generate billions of dollars in revenue each year and the lawsuit seeks to recover the money earned by loot boxes, claiming they violate gambling laws and consumer protection regulations.
The lawsuit alleges that the chance to win an item from a loot box is part of the compulsion loop keeping players invested in a game, saying such loops are known to contribute to video game addiction and are frequently compared to gambling addictions.
Mikhail, who has studied video gaming, looked over the lawsuit and had some opinions.
“My big worry is they’re coming at this with a sledgehammer rather than a scalpel,” he said.
Mikhail thinks there is valid concern about over-purchasing within games which could have a warning when a player reaches a certain level. But he questions whether or not it’s actually gambling.
“(With) a lot of these things you’re getting something out of it, even if it’s not what you wanted,” he said. “I would say it’s not different than a Kinder Surprise or a gumball machine.”
Electronic Arts never responded to our request for comment on the lawsuit, but the Entertainment Software Association of Canada, which represents video game developers, weighed in.
“They’re not gambling. There’s nothing you can do with these items other than use them within the closed ecosystem of that game,” said Jayon Hilchie, president and CEO of the Entertainment Software Association of Canada.
He pointed to a recent survey, released last fall, that showed only about seven per cent of adult video game users in Canada purchased loot boxes within the past six months. There was not a large enough sampling of teens to see how much they bought. However, according to a July 2020 article in Statista, a research and market data website, 87 per cent of U.S. gamers admitted to purchasing downloadable content.
There is a lot of peer pressure to gather some of the coveted virtual items in loot boxes, which sometimes leads those who gain them to sell their gamer accounts on third party websites for a lot of money.
“Any time companies find that out, they move very quickly to suspend those accounts,” said Hilchie.
He believes the industry largely polices itself. But the Netherlands and Belgium have decided some loot boxes constitute gambling and have banned them. In fact, EA is appealing millions of Euros in potential fines over its FIFA loot boxes in the Netherlands.
But here in North America, the allegation that loot boxes are a form of illegal gambling still needs to be tested in court.
B.C.’s Gaming Policy and Enforcement Branch is aware of the controversy but told CTV News it has no role in regulating video games. However, it has heard from parents and community members that youth are being exposed to gambling through similar game elements.
The province has asked the University of British Columbia’s Centre for Gambling Research to study the impact of loot boxes and other in-game transactions on gambling addiction on players. The study, which recently started, is expected to take 18 months and the Gaming Policy and Enforcement Branch says the outcome will factor in its consideration of next steps.
Read through the notice of civil claim below. If the embed isn't showing up, or you'd like to view a larger version, tap here.